ITC shares fall heavily due to ‘smoking’! Lakhs of investors lost money due to a decision of the government, know what to do now?

On the very first day of the new year, the shareholders of ITC, the country’s largest cigarette manufacturing company, got a big shock. Apart from GST, the government has announced to impose another new tax (Additional Excise Duty) on cigarettes and tobacco, which will be applicable from February 1, 2026. After this announcement of the government, ITC shares went up in smoke in the stock market. On January 1, the share price fell by almost 10% in a single day to ₹ 363.95, due to which investors lost millions of rupees. Why did big experts reduce the rating of ITC? After this ‘tax bomb’ of the government, big brokerage firms of the stock market (which do research on companies) like Motilal Oswal, Nuvama and JP Morgan have changed their opinion about the stock of ITC. Earlier: They were advising investors to ‘buy, buy’. Now: They are saying ‘now Wait, see’ (Hold/Neutral), that is, now is not the time to buy. Why are experts so scared? Increase more than expected: Nuwama said, “We had an idea that the tax on cigarettes would increase, but we did not think that it would increase so much. This is a surprising increase.” Prices of cigarettes will increase, sales will decrease: Experts believe that to avoid the burden of this new tax, ITC will be imposed on every cigarette. The price of ITC will have to be increased by at least 25%. Impact on profits: When cigarettes become so expensive, people will buy less of them, due to which both the sales (volume) and profits (EBITDA) of ITC’s cigarettes will decrease. Due to this fear, brokerage firms have also reduced the price target of ITC’s shares: Nuwama: reduced from ₹ 534 to ₹ 415. Motilal Oswal: reduced to ₹ 400. Given.JP Morgan: Decreased from ₹475 to ₹375.So what should investors do now?JP Morgan believes that after this huge tax hike, it is very difficult for ITC stock to go up in the next 6 to 9 months. Experts advise to avoid making fresh investments in this stock for now and adopt a ‘wait and watch’ strategy. However, some firms like UBS are still positive and have maintained ‘buy’ rating, but they have also reduced their price target from ₹ 490 to ₹ 430. This case shows how a decision of the government can have a direct impact on the fortunes of a company and the money of millions of investors.